Fed Holds Interest Rate at 4.25-4.5% Despite Trump’s Call for a Cut: Here’s the Impact on Crypto

The US Federal Reserve has finally announced its first policy decision for 2025 following two-day Federal Open Market Committee (FOMC) meeting. According to the recent press release, the Federal Open Market Committee decided to maintain interest rates at their current range of 4.25% to 4.5%. This decision follows after the committee lowered rates three times consecutively last year.

Fed Pauses Rate Cuts Despite Trump’s Call

As expected, Federal Reserve officials decided not to change interest rates after their recent two-day meeting, the first under President Trump’s second term. They made this choice even though President Donald Trump Donald Trump Donald Trump is an American former president politician, businessman, and media personality, who served as the 45th president of the U.S. between 2017 to 2021. Trump earned a Bachelor of science in economics from the University of Pennsylvania in 1968. Trump won the 2016 presidential election as the Republican Party nominee against Democratic Party nominee Hillary Clinton while losing the popular vote. As president, Trump ordered a travel ban on citizens from several Muslim-majority countries, diverted military funding toward building a wall on the U.S.–Mexico border, and implemented a family separation policy. Trump has remained a prominent figure in the Republican Party and is considered a likely candidate for the 2024 presidential election President has been pushing them to lower the rates.

At their December meeting, US Federal Reserve officials voted 11 to 1 to cut the main interest rate by 0.25% to a range of 4.25-4.50%, just as Wall Street predicted. This marked the Fed’s third consecutive rate cut in 2024 and followed another 0.25% cut in November.

The committee led by US Fed Chair Jerome Powell Jerome Powell Jerome Hayden "Jay" Powell is an American attorney and investment banker who has served since 2018 as the 16th chair of the Federal Reserve Finance now expects to make just one or two interest rate cuts in 2025. This decision comes after recent reports showed that consumer prices are still somewhat high in the United States.

After increasing the policy rate by 5.25 percentage points since March 2022 to tackle the worst inflation in 40 years, the Fed has kept the rate steady since July 2023. This pause aims to stabilize high inflation and gradually reduce it to the target range of 2%.

Crypto Market Remains Stable

The crypto market stayed fairly stable because it had already expected the decision to keep interest rates unchanged. Fed Chair Jerome Powell previously mentioned that the committee isn’t rushing to lower the key benchmark interest rates and will proceed more cautiously with any rate cuts.

Data from CoinMarketCap shows that Bitcoin price made a minor decline in recent minutes. The BTC price dropped from the peak of $102.9K to the low of $101.7K.

The crypto market’s attention will turn to the next FOMC meeting and comments from Powell on future rate cuts. Any unexpected developments or surprises will likely be the key drivers of Bitcoin’s price action.

President Donald Trump is following through on his campaign pledge to remove illegal immigrants from the U.S., starting deportation flights over the weekend. Estimates suggest that the total number of deportations could be anywhere between one million and 10 million.

Analysts believe that large-scale deportations could strengthen the labor market and lead to higher inflation

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Additionally, Trump has threatened to impose 25% import tariffs on goods from Mexico and Canada starting as soon as Saturday. Most economists believe these actions are more likely to increase inflation rather than help to reduce it.

Although the president does not have control over the Federal Reserve’s policy decisions, he and Fed Chair Jerome Powell have clashed over policy since Trump’s first term in office. Just last week, Trump stated that he would “demand an immediate drop in interest rates.”